What Are Building Defects?
Building defects are departures from the requirements of the building contract, the approved plans and specifications, the applicable Building Code of Australia (BCA/NCC), and/or relevant Australian Standards. In Victoria, the statutory implied warranties in s8 of the Domestic Building Contracts Act 1995 (DBCA) provide a powerful additional layer of protection — requiring builders to perform work in a proper and workmanlike manner using materials that are good and suitable for their purpose.
Types of Building Defects
Structural Defects
Structural defects affect the stability, integrity, or loadbearing capacity of the building. They include problems with: foundations and footings, structural steel, loadbearing walls, roof framing, and slabs. Structural defects are generally the most serious category and can affect safety, habitability, and property value. Expert structural engineering evidence is essential in structural defect claims.
Waterproofing and Water Ingress
Waterproofing failures are the most common building defect complaint in new Victorian buildings. They include: leaking roofs, failed wet area waterproofing (bathrooms, laundries), leaking balconies and terraces, water ingress through walls and windows, and basement flooding. Since the introduction of mandatory waterproofing inspections proposed under the Building Amendment Regulations 2025, early detection of waterproofing failures is expected to improve.
Cladding Defects
Combustible cladding remains a significant issue in Victoria following the Lacrosse fire (2014) and Grenfell Tower (UK, 2017). Cladding Safety Victoria (CSV) has been managing a government-funded $600 million rectification program since 2019 — approximately 80% of identified buildings had completed rectification works by mid-2025. Owners of buildings with unresolved cladding issues face liability and insurance exposure.
Finishing and Workmanship Defects
Cosmetic and finishing defects — inconsistent tiling, poor paintwork, misaligned joinery, non-compliant floor levels — are common and often disputed. While individually minor, multiple finishing defects can justify substantial rectification claims when aggregated. Following Stanley v EWH Constructions [2025] VSC 699, courts will assess the proportionality of rectification costs — demolition and rebuild is not automatically available for every defect.
Compliance Defects
Compliance defects are departures from the Building Code of Australia (BCA/NCC) or the approved permit documents — even if the result is structurally adequate. Common compliance defects include non-compliant fire-stopping, non-compliant stair geometry, inadequate ventilation, and sub-standard insulation installation.
New BPC Rectification Order Powers (From 1 July 2025)
One of the most significant changes introduced by the Buyer Protections Act 2025 is the BPC's power to issue building rectification orders against builders and developers for up to 10 years after an occupancy permit is issued. This is a fundamental expansion of the regulatory toolkit:
- Rectification orders can require completion of building work, rectification of defective work, or rectification of damage caused by defective work
- The BPC may investigate before issuing an RO and may recover investigation costs from the builder/developer
- It is an offence to contravene an RO — contravention risks disciplinary action and suspension of registration
- The BPC may apply to VCAT for an extension beyond the standard 10-year limit in exceptional circumstances
- These powers apply retrospectively to work completed before the reforms
Critically, failure to comply with a BPC rectification order will trigger access to first-resort Domestic Building Insurance (DBI) — without requiring the builder to be insolvent. This gives owners significantly more leverage in enforcing defect rectification claims.
Limitation Periods for Building Defect Claims
Limitation periods determine how long you have to bring a claim. In Victoria:
- Building Act 1993 (Vic), ss134–134A: Actions for breach of the Act (including breach of the Building Code) must be commenced within 10 years of the date of the occupancy permit or certificate of final inspection.
- Domestic Building Contracts Act 1995 (Vic), s8: Actions for breach of the statutory implied warranties — 10 years from the date of the occupancy permit or certificate of final inspection.
- Contract claims: 6 years from the breach (Limitation of Actions Act 1958 (Vic)), which in defect cases typically starts when the defects become manifest or discoverable.
- BPC rectification orders: Can be issued for up to 10 years post-occupancy permit.
Expert Evidence in Building Defect Claims
Expert evidence from a qualified building consultant or engineer is essential in almost every building defect claim above a minor value. Experts must:
- Be qualified as building practitioners or registered engineers
- Have experience relevant to the type of defect alleged (e.g., structural engineers for structural defects)
- Comply with VCAT's Expert Evidence Practice Directions, including the duty to the Tribunal
- Provide a report that clearly identifies the defects, their cause, and the reasonable cost of rectification
Matrix Legal has established relationships with specialist building consultants across Victoria who can provide expert reports for defect claims. Early engagement of the right expert is often the difference between a strong claim and a failed one.
Frequently Asked Questions — Building Defects
The statutory implied warranties in s8 DBCA cover all building work — including finishing and cosmetic work — requiring it to be done in a "proper and workmanlike manner" and using materials that are "good and suitable." This is a high standard. However, the measure of damages (the cost of rectification) must be reasonable and proportionate — Stanley v EWH Constructions [2025] VSC 699 confirms that demolition and rebuild is not available unless it is a reasonable response to the defect. Courts and VCAT will consider: the nature of the defect, the cost of rectification relative to the practical benefit achieved, and whether less drastic remediation is available.
Yes. Under s9 of the Domestic Building Contracts Act 1995 (Vic), the statutory implied warranties run with the property and can be enforced by successive owners of the property. This means that if you purchased a property that has building defects, you may be able to make a claim against the original builder — even though you were not a party to the original building contract. The 10-year limitation period still applies from the date of the occupancy permit. Seek legal advice as soon as possible if you have discovered defects in a property you purchased.
Under the Building Act 1993 (Vic) and case law, "major structural defects" are those that affect the structural integrity or safety of the building — including problems with foundations, loadbearing walls, roof structure, and structural steel. "Minor defects" are typically cosmetic or finishing issues that do not affect habitability or structural integrity. The distinction matters because: (a) major structural defects may attract different limitation periods; (b) the developer bond scheme (for buildings over 3 storeys) focuses on major defects; and (c) the proportionality of rectification costs is weighed differently for major vs. minor defects.
In multi-storey apartment buildings, defect liability can involve the developer, the head contractor, the building surveyor, design consultants (architects, structural engineers), and subcontractors. The Owners Corporation (OC) has standing to pursue claims for defects in common property. Following the High Court's decision in Pafburn v Owners — Strata Plan 84674 [2024] HCA 49 (a NSW case), developers and head contractors who owe statutory duties of care may face non-apportionable liability for the work of subcontractors — though Victoria does not yet have an equivalent statutory duty of care to the NSW Design and Building Practitioners Act 2020.
If a builder refuses to rectify defects: (1) Send a formal written demand specifying the defects, requiring rectification within a reasonable time (typically 14–28 days), and reserving all legal rights. (2) If the builder does not respond, apply to the BPC for DBDRV conciliation — the BPC can arrange an independent building assessment and issue binding rectification orders. (3) If conciliation fails, proceed to VCAT with your Certificate of Conciliation and independent expert evidence. (4) If the builder is registered, a complaint to the BPC can trigger disciplinary action and professional consequences. (5) From July 2026, failure to comply with a BPC rectification order can trigger first-resort DBI claims.
Commencing by 1 July 2026, developers of residential apartment buildings above 3 storeys must lodge a bond equal to 2% of the total build cost with the BPC before applying for an occupancy permit. An independent building assessor is appointed to conduct: (a) a preliminary inspection report within 18 months of occupancy; and (b) a final report if defects are found. If a serious defect is found and a rectification order is not complied with, the developer may be unable to apply for the occupancy permit, register the plan of subdivision, or complete off-the-plan sales. Penalties for non-compliance: up to 2,500 penalty units (approximately $500,000).
General information only. This information is general in nature and does not constitute legal advice. Building defect claims require careful factual and legal analysis. Please contact Matrix Legal for advice about your specific circumstances.